Like many young men and women, I played sports in school. As a young man in Texas, my favorite sport was football. My coaches would try to motivate us to work harder in the Texas heat. The football field was hot, and we were tired. However, my coaches knew something we didn’t. They knew that motivation can be found in the most challenging places.
My coaches knew, for example, that as young men playing Texas football, we were competitive. All they had to do was challenge us to beat the guy next to us, and we would dig in and give more.
They also knew if they gave us a goal we would meet it, so they kept raising the bar. They even rewarded us when we would exceed the goal they set.
The lessons I learned on the football field, not only helped me to develop my character as a young man, they also taught me a lot about life as I became an adult.
The main lessons were:
In my last blog, I highlighted 3 Keys to Blow Away Your Breakeven.
In this part 2, I have included real compensation programs that my clients are using to:
Bill will probably run 40 calls in May. Last May, he ran 38 calls, so 40 is a realistic number. His average ticket should be at least $280 or higher, so Bill should produce at least $11,200 in service revenues. Bill will also run 35 maintenance calls, and his average ticket should be $175 or higher = $6,125. So, Bill’s total service revenues should total $17,325, or more, for May.
Is this all? NO – Bill must also produce replacement leads. If he runs 75 calls in May, he should create enough leads to produce 7 or 8 install sales. The average for replacement sales in HVAC is one replacement sale for every 10 calls. Now, if your average install were only $6500, then this would add an additional $45,500 (7 X $6500). So, Bill’s total goal for May is $62,825 – ($17,325 service + $45,000 from sales leads).
Why will Bill care? Does he get a commission on leads that close? Does he get paid more if he turns over 3 leads or if he turns over 10 leads? In many cases, Bill is paid an hourly wage. If he doesn’t get paid much more, Bill won’t care about providing more leads. This is not Bill’s fault. His owner has not designed a good reason to make Bill care about setting leads.
Bill will run 55 calls in May based on previous years (22 workdays X 2.5 calls per day is a good average). His average ticket should be $650 or higher for plumbing, and $1,000 or higher for electrical. This may sound a little high compared to what your technicians are doing, but these are average revenues for my clients once their technicians have a number to aim for. Guys need a clear goal!
1) Guys need something specific to aim for.
2) Guys need a reason to care to aim.
If you doubt me, then look down at the floor the next time you are in a bathroom in an airport or a restaurant. You can’t tell me these same guys do this at home! I am sure their wife would not tolerate such a mess for a second. In fact, guys will not do this in their own home even if they are single.
Let’s say Bill earns 2% on leads that he turns over to a comfort advisor AFTER they sell. Once Bill hits his $62,825 goal for May, his commission would then become 3.5% of all sales above his monthly production goal!
Can you afford to increase his commission by 1.5%? YES, because he has covered your costs for both COGS (cost of goods sold) and for overhead. Your profit on Bill’s future service and sales for the month of May is radically higher!
What if your team achieves your company’s goal for the month? Then, Bill’s commission would go to 4.5% because he hit his personal goal. He now deserves an additional percentage of future sales for May, because he was a key team player in achieving your company goal.
Now if another technician named Ted works for you, and Ted did not achieve his personal goal, then his commissions DO NOT increase at all. Each technician must do his share of the work in order to benefit from the team bonus.
Some clients also add a 4-5% commission on all service revenues AFTER the company goal is met. Guess how many months they meet their company goal? Most of ‘em.
Several clients have seen their team meet their monthly TRUE BREAKEVEN before the 15th of the month numerous times each year. Their techs are driven by their goal program. They take pride in meeting their goals and taking home checks for hitting personal bonus and team bonus.
Ride alongs are a perfect way to inspect what you expect. Download the Free Ride Along Tool today.
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